UK-based pharmaceuticals giant GlaxoSmithKline will this week avoid a repeat of the unprecedented revolt by shareholders last year when they voted to reject a £22 million pay and compensation package for chief executive Jean-Pierre Garnier.

It was the first time British investors voted down a company's remuneration report and came amid intense government pressure for shareholders to put a stop to 'fat cat' pay awards.

But GSK, under the chairmanship of Sir Christopher Hogg, is thought to have given enough ground to avert another defeat at the annual shareholder meeting in London tomorrow. Nevertheless, 15 to 20 per cent of investors are expected to abstain or vote against the remuneration proposals, following complaints from activists.

The influential Association of British Insurers has criticised GSK for failing to set rigorous enough performance targets when paying executives. But the ABI, which represents a fifth of the UK stock market, has stopped short of declaring GSK in serious breach of its guidelines.

Leading shareholders appear to have been mollified by the decision to cut Garnier's contract from two years to 12 months. That means he is eligible for just one year's money if he is ousted, reduc ing the value of his compensation package and avoiding the possibility of him receiving an 'award for failure'.

But Pension and Investment Research Consultants have pointed out that Garnier could still collect between £6m and £18m in pay and perks this year if the company meets all targets. This is viewed as 'overly generous'.

The pay spat centres around the company's belief that Garnier should be paid rates similar to those of bosses of big pharmaceutical companies in the US, which GSK considers its competitors. This argument does not wash with some British institutional investors.

GSK has had a rough ride in the City since it began in 2001 when Glaxo of the UK and SmithKline of the US merged. The group has been hit by a number of patent expiries and needs to come up with new blockbuster drugs to plug holes in its portfolio.